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Minnesota Legislature

Office of the Revisor of Statutes

SF 2956

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to health; establishing a voluntary statewide pool to provide health
benefits to eligible members; providing for the administration and oversight of
the pool; appropriating money; proposing coding for new law as Minnesota
Statutes, chapter 62U.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text beginINTENT.
new text end

new text begin The legislature finds that the creation of a voluntary statewide pool to provide public
and private employers, individuals, and others with the advantages of a large pool for the
purchasing of affordable, comprehensive, accessible, and high quality health benefits
would advance the welfare of the citizens of the state.
new text end

Sec. 2.

new text begin [62U.01] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purposes of this chapter, the terms defined in
subdivisions 2 to 11 have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Cost-effective. new text end

new text begin "Cost-effective" has the meaning given the term in section
62J.03.
new text end

new text begin Subd. 3. new text end

new text begin Community rating. new text end

new text begin "Community rating" means a rating methodology
in which the premiums charged by the pool for all enrollees is the same based upon the
experience of the entire pool of risks covered without regard to gender, health status,
residence, or occupation.
new text end

new text begin Subd. 4. new text end

new text begin Dependent. new text end

new text begin "Dependent" means a spouse or unmarried child under the
age of 25, or a dependent child of any age who is disabled.
new text end

new text begin Subd. 5. new text end

new text begin Employee. new text end

new text begin "Employee" means an employee of an eligible employer.
Employee includes a sole proprietor, partner of a partnership, member of a limited liability
company, or independent contractor.
new text end

new text begin Subd. 6. new text end

new text begin Employer. new text end

new text begin "Employer" means a private person, firm, corporation,
partnership, limited liability company, association, or other entity actively engaged in
business or public services. Employer includes both for-profit and nonprofit entities and
the state of Minnesota and any political subdivision of the state.
new text end

new text begin Subd. 7. new text end

new text begin Guaranteed issue. new text end

new text begin "Guaranteed issue" means that the pool must not
decline an application for coverage by an employer, individual, or other pool and must
not decline to provide coverage in the pool to those eligible for coverage after initial
issuance of coverage in the pool.
new text end

new text begin Subd. 8. new text end

new text begin Health benefits. new text end

new text begin "Health benefits" means benefits which pay the cost of
medical, surgical, hospital, or dental care, and pharmacy benefits offered by the pool
to eligible members of the pool.
new text end

new text begin Subd. 9. new text end

new text begin Health care provider. new text end

new text begin "Health care provider" has the meaning given
in section 62J.70, subdivision 2.
new text end

new text begin Subd. 10. new text end

new text begin Individual. new text end

new text begin "Individual" means a person eligible to participate in the pool
under the terms established according to section 62U.08.
new text end

new text begin Subd. 11. new text end

new text begin Pool. new text end

new text begin "Pool" means the Minnesota health benefits purchasing pool
created by this chapter.
new text end

Sec. 3.

new text begin [62U.02] MINNESOTA HEALTH BENEFITS PURCHASING POOL
ASSOCIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Creation. new text end

new text begin The Minnesota Health Benefits Purchasing Pool
Association may operate as a nonprofit unincorporated association, but is authorized to
incorporate under chapter 317A. All covered lives enrolled in the pool are members
of the association.
new text end

new text begin Subd. 2. new text end

new text begin Purpose. new text end

new text begin The association is created to establish and administer the
Minnesota health benefits purchasing pool consistent with the provisions of this chapter.
new text end

new text begin Subd. 3. new text end

new text begin Exemptions. new text end

new text begin The association, its transactions, and all property owned by it
are exempt from taxation under the laws of this state or any of its subdivisions, including,
but not limited to, premiums taxes imposed under chapter 297I, income tax, sales tax, use
tax, and property tax. The association may seek exemption from payment of all fees and
taxes levied by the federal government. Except as otherwise provided in this chapter, the
association is not subject to the provisions of chapters 13, 13D, 60A, and 62A to 62H. The
association is not a public employer and is not subject to the provisions of chapters 179A
and 353. The association and the board of directors are exempt from sections 325D.49 to
325D.66 in the performance of their duties as directors of the association.
new text end

new text begin Subd. 4. new text end

new text begin Powers of association. new text end

new text begin The association may exercise all of the powers of a
corporation formed under chapter 317A, including, but not limited to, the authority to:
new text end

new text begin (1) establish operating rules, conditions, and procedures relating to the provision of
health benefits offered by the pool to eligible members of the pool, including reasonable
temporary enrollment restrictions and other temporary coverage restrictions deemed
necessary by the association to ensure the pool's financial health;
new text end

new text begin (2) impose a membership fee on the terms the board determines are appropriate;
new text end

new text begin (3) establish procedures consistent with the requirements of this chapter and the
needs of the association that promote public access and accountability, including public
notice and open meeting procedures, and procedures that allow reasonable public access
to information created or maintained by the association;
new text end

new text begin (4) sue and be sued;
new text end

new text begin (5) enter into contracts necessary to carry out the provisions of this chapter;
new text end

new text begin (6) establish operating, administrative, and accounting procedures for the operation
of the pool; and
new text end

new text begin (7) borrow money against the future receipt of premiums.
new text end

new text begin The provisions of this chapter govern if the provisions of chapter 317A conflict with
this chapter. The association shall operate under the plan of operation approved by the
board and shall be governed in accordance with this chapter and may operate in accordance
with chapter 317A. If the association incorporates as a nonprofit corporation under chapter
317A, the filing of the plan of operation meets the requirements of filing articles.
new text end

new text begin Subd. 5. new text end

new text begin Review and approval of policy forms, contracts, and premiums.
new text end

new text begin The association's policy forms, contracts, and premium rates are subject to the approval
of the commissioner of commerce on the same terms and subject to the same conditions
as a carrier regulated under chapters 62A, 62C, and 62D. The association shall notify
the commissioner of all association or board meetings, and the commissioner or the
commissioner's designee may attend all association or board meetings. The association
shall file an annual report with the commissioner on or before July 1 of each year,
beginning July 1, 2009, describing its activities during the preceding calendar year. The
report must include a financial report and a summary of claims paid by the association.
The annual report must be available for public inspection.
new text end

Sec. 4.

new text begin [62U.03] BOARD OF DIRECTORS.
new text end

new text begin Subdivision 1. new text end

new text begin Composition of board. new text end

new text begin (a) The association shall exercise its powers
through a board of 15 directors. Five directors shall be employers who are members of
the association; five directors shall be individuals who are members of the association;
and five directors shall be health care providers elected from a slate, established by the
administrator, that is representative of health care providers from all geographic areas
of the state. No more than seven of the directors so appointed may be residents of the
seven-county metropolitan area.
new text end

new text begin (b) The board shall include the following ex officio, nonvoting directors:
new text end

new text begin (1) one director appointed by the governor;
new text end

new text begin (2) two directors of the house of representatives, one from the majority caucus and
one from the minority caucus, appointed by the speaker of the house of representatives;
new text end

new text begin (3) two directors of the senate, one from the majority caucus and one from the
minority caucus, appointed by the Subcommittee on Committees of the Committee on
Rules and Administration.
new text end

new text begin The terms of these ex officio directors shall be three years and no director may
serve more than two consecutive terms.
new text end

new text begin (c) The following employees of the association are also ex officio, nonvoting
directors of the board: the administrator, an actuary, a legal advisor, and the enrollee
ombudsman.
new text end

new text begin Subd. 2. new text end

new text begin Appointment of board. new text end

new text begin The members of the association shall elect the
board of directors in accordance with this chapter and the plan of operation.
new text end

new text begin Subd. 3. new text end

new text begin Term of office. new text end

new text begin Each director shall serve a three-year term, except that the
board shall make appropriate arrangements to stagger the terms of the directors so that
approximately one-third of the terms expire each year. Each director shall hold office
until expiration of the director's term or until the director's successor is duly appointed
and qualified, or until the director's death, resignation, or removal. A director may not
serve for more than two consecutive terms.
new text end

new text begin Subd. 4. new text end

new text begin Resignation. new text end

new text begin A director may resign at any time by giving written notice
to the board. The resignation takes effect at the time the resignation is received unless
the resignation specifies a later date. If a vacancy occurs for a director, the board shall
appoint a new director for the duration of the unexpired term.
new text end

new text begin Subd. 5. new text end

new text begin Quorum. new text end

new text begin A majority of the voting directors constitutes a quorum for the
transaction of business. If a vacancy exists by reason of death, resignation, or otherwise, a
majority of the remaining voting directors constitutes a quorum.
new text end

new text begin Subd. 6. new text end

new text begin Duties of directors. new text end

new text begin The board shall develop a plan of operation and
reasonable operating rules to assure the fair, reasonable, and equitable administration of the
pool. The plan of operation must include the development of procedures and the coverage
options to be offered by the pool that are consistent with this chapter. The plan of operation
must be submitted to the members for approval at the first meeting of the members. The
board of directors may subsequently amend, change, or revise the plan of operation.
new text end

new text begin Subd. 7. new text end

new text begin Officers. new text end

new text begin The board may elect officers and establish committees as
provided in the bylaws of the association. Officers have the authority and duties in the
management of the association as prescribed by the bylaws and determined by the board
of directors.
new text end

new text begin Subd. 8. new text end

new text begin Majority vote. new text end

new text begin Approval by a majority of the directors present is required
for any action of the board.
new text end

Sec. 5.

new text begin [62U.04] MEMBERS.
new text end

new text begin Subdivision 1. new text end

new text begin Annual meeting. new text end

new text begin The association shall conduct an annual meeting
of the members of the association for the purpose of electing directors and transacting
any other appropriate business of the membership of the association. The board shall
determine the date, time, and place of the annual meeting.
new text end

new text begin Subd. 2. new text end

new text begin Special meetings. new text end

new text begin Special meetings of the members must be held
whenever called by any five of the directors or upon a petition signed by 25 percent of the
members of the association. Special meetings of the members must be held at a time and
place designated in the notice of the meeting.
new text end

new text begin Subd. 3. new text end

new text begin Member compliance. new text end

new text begin All members shall comply with the provisions of
this chapter, the association's bylaws, the plan of operation developed by the board of
directors, and any other operating, administrative, or other procedures established by the
board of directors for the operation of the association.
new text end

Sec. 6.

new text begin [62U.05] ADMINISTRATION OF POOL.
new text end

new text begin Subdivision 1. new text end

new text begin Administrator. new text end

new text begin The board shall hire a qualified person to operate
and administer the pool. The administrator shall perform all administrative functions
required by this chapter. The board of directors shall develop administrative functions
required by this chapter and written criteria for the selection of an administrator.
new text end

new text begin Subd. 2. new text end

new text begin Duties of administrator. new text end

new text begin (a) The administrator shall perform all functions
required by this chapter including:
new text end

new text begin (1) hiring employees, including actuaries, legal personnel, and an enrollee
ombudsman;
new text end

new text begin (2) preparing and submitting an annual report to the association;
new text end

new text begin (3) preparing and submitting monthly reports to the board of directors;
new text end

new text begin (4) paying claims to health care providers following the submission by health care
providers of acceptable claim documentation; and
new text end

new text begin (5) providing claim reports to health care providers as determined by the board of
directors.
new text end

new text begin (b) The administrator shall assist the board in developing the coverage options and
the premium rates for the pool.
new text end

new text begin Subd. 3. new text end

new text begin Records of association. new text end

new text begin The administrator shall maintain appropriate
records and documentation relating to the activities of the association. All individual
patient-identifying claims data and information are confidential and not subject to
disclosure of any kind. All records, documents, and work product prepared by the
association or by the administrator for the association are the property of the association.
The commissioner of commerce shall have access to the data for the purposes of carrying
out the commissioner's duties under section 62U.02, subdivision 5.
new text end

new text begin Subd. 4. new text end

new text begin Indemnification. new text end

new text begin The association shall indemnify directors, officers,
employees, and agents to the same extent that persons may be indemnified by corporations
under section 317A.521.
new text end

Sec. 7.

new text begin [62U.06] EMPLOYER ELIGIBILITY.
new text end

new text begin Subdivision 1. new text end

new text begin Procedures. new text end

new text begin All employers are eligible for coverage through the
pool subject to the terms of this section. The association shall establish procedures for
an employer to apply to, become enrolled in, obtain coverage from, and withdraw from,
the pool.
new text end

new text begin Subd. 2. new text end

new text begin Term. new text end

new text begin The initial term of an employer's coverage shall be established by
the association. After that, coverage will be automatically renewed for an additional term
unless the employer gives notice of withdrawal from the pool according to procedures
established by the association or the association gives notice to the employer of the
discontinuance of the pool. The association may establish conditions under which an
employer may withdraw from the pool before expiration of a term, and conditions under
which the employer may reapply for coverage. An employer that withdraws from the pool
may not reapply for coverage for a period of time equal to its initial term of coverage.
new text end

new text begin Subd. 3. new text end

new text begin Minnesota work force. new text end

new text begin An employer is not eligible for coverage
through the pool if five percent or more of its eligible employees work primarily outside
Minnesota, except that an employer may apply to the pool on behalf of only those
employees who work primarily in Minnesota.
new text end

new text begin Subd. 4. new text end

new text begin Employee participation; aggregation of groups. new text end

new text begin An employer is not
eligible for coverage through the pool unless its application includes all eligible employees
who work primarily in Minnesota, except employees who waive coverage as permitted
by section 62U.07, subdivision 4. Private entities that are eligible to file a combined tax
return for purposes of state tax laws are considered a single employer, except as otherwise
approved by the association.
new text end

new text begin Subd. 5. new text end

new text begin Private employer. new text end

new text begin A private employer is not eligible for coverage unless it
has two or more eligible employees in the state of Minnesota. If an employer has only
two eligible employees and one is the spouse, child, sibling, parent, or grandparent of
the other, the employer must be a Minnesota domiciled employer and have paid Social
Security or self-employment tax on behalf of both eligible employees.
new text end

Sec. 8.

new text begin [62U.07] EMPLOYEE ELIGIBILITY.
new text end

new text begin Subdivision 1. new text end

new text begin Procedures. new text end

new text begin The association shall establish procedures for
employees and other eligible individuals to apply to, become enrolled in, obtain coverage
from, and withdraw from, the pool.
new text end

new text begin Subd. 2. new text end

new text begin Employees. new text end

new text begin The association shall determine, when an employer applies
to the pool, the criteria its employees must meet to be eligible for coverage under its
plan. The criteria must provide that all employees are eligible for coverage unless the
association establishes otherwise, and that new employees must elect coverage within
90 days of the start of their employment.
new text end

new text begin Subd. 3. new text end

new text begin Other dependents and individuals. new text end

new text begin The association may elect to cover:
new text end

new text begin (1) the spouse, dependent children, and dependent grandchildren of a covered
employee;
new text end

new text begin (2) a retiree who is eligible to receive a pension or annuity from the employer and a
covered retiree's spouse, dependent children, and dependent grandchildren;
new text end

new text begin (3) the surviving spouse, dependent children, and dependent grandchildren of a
deceased employee or retiree, if the spouse, children, or grandchildren were covered
at the time of the death;
new text end

new text begin (4) a covered employee who becomes disabled, as provided in sections 62A.147
and 62A.148; or
new text end

new text begin (5) any other categories of individuals for whom group coverage is required by
state or federal law.
new text end

new text begin Subd. 4. new text end

new text begin Waiver and late entrance. new text end

new text begin An eligible individual may waive coverage
at the time the employer joins the pool or when coverage first becomes available. The
association may establish a preexisting condition exclusion of not more than 18 months
for late entrants.
new text end

Sec. 9.

new text begin [62U.08] INDIVIDUAL ELIGIBILITY.
new text end

new text begin All individuals in the state are eligible for coverage through the pool subject to
the terms established by the association. The association shall establish procedures for
individuals to apply to, become enrolled in, obtain coverage from, and withdraw from,
the pool.
new text end

Sec. 10.

new text begin [62U.09] OTHER POOL ELIGIBILITY.
new text end

new text begin Subdivision 1. new text end

new text begin Procedures. new text end

new text begin All mandatory or voluntary health care pools operating
in the state are eligible for coverage through the pool subject to the terms of this section.
The association shall establish procedures for a pool to apply to, become enrolled in,
obtain coverage from, and withdraw from, the pool.
new text end

new text begin Subd. 2. new text end

new text begin Term. new text end

new text begin The initial term of a pool's coverage shall be established by
the association. After that, coverage will be automatically renewed for an additional
term unless the enrollee pool gives notice of withdrawal from the pool according to
procedures established by the association or the association gives notice to the enrollee
pool of the discontinuance of the pool. The association may establish conditions under
which the enrollee pool may withdraw from the pool before expiration of a term, and
conditions under which the enrollee pool may reapply for coverage. An enrollee pool that
withdraws from the pool may not reapply for coverage for a period of time equal to its
initial term of coverage.
new text end

Sec. 11.

new text begin [62U.10] COVERAGE.
new text end

new text begin Subdivision 1. new text end

new text begin Generally. new text end

new text begin Subject to any temporary enrollment and other temporary
restrictions established by the association, coverage through the pool must be made
available on a guaranteed issue basis. No more than three coverage options may be offered
through the pool. The association shall provide coverage through contracts directly with
health care providers. The association may charge all members a fee for administrative
purposes.
new text end

new text begin Subd. 2. new text end

new text begin Health benefits. new text end

new text begin (a) The association shall establish health benefits that:
new text end

new text begin (1) have strong care management features to control costs and promote quality
including: (i) financial incentives for patients, in appropriate situations, to select a care
coordinator who will coordinate health care services across the continuum of care; and
(ii) coverage for cost-effective services, including the use of cost-effective disease
management programs;
new text end

new text begin (2) provide reimbursement to health care providers for the full cost of each health
service provided;
new text end

new text begin (3) promote enrollee wellness and education;
new text end

new text begin (4) are available in all the geographic areas of the state; and
new text end

new text begin (5) remove or reduce barriers for enrollees to get needed services.
new text end

new text begin (b) Health coverage for a retiree who is eligible for the federal Medicare program
must be administered as though the retiree is enrolled in Medicare parts A and B.
new text end

new text begin (c) To the extent feasible as determined by the association and in the best interests of
the pool, the association shall model coverage after the coverage provided pursuant to
section 43A.23, subdivision 2. Health benefits must include at least the benefits required
of a carrier regulated under chapter 62A, 62C, or 62D for comparable coverage.
new text end

new text begin Subd. 3. new text end

new text begin Continuation coverage. new text end

new text begin The pool shall provide all continuation coverage
required by state and federal law.
new text end

new text begin Subd. 4. new text end

new text begin Technical assistance. new text end

new text begin The association may arrange for technical assistance
and referrals for enrollees in areas such as health promotion and wellness, employee
benefits structure, tax planning, and health care analysis services as described in section
62J.2930.
new text end

Sec. 12.

new text begin [62U.11] PREMIUMS.
new text end

new text begin Subdivision 1. new text end

new text begin Payments. new text end

new text begin Employers, individuals, and other pools enrolled in the
pool shall pay premiums according to terms established by the association. If an employer,
individual, or other pool fails to make the required payments, the association may cancel
coverage and pursue other civil remedies.
new text end

new text begin Subd. 2. new text end

new text begin Rating method. new text end

new text begin The association shall determine the premium rates and use
community rating in setting the premium rates. The premium rates may vary depending on
the ages of enrollees. The association must recover in premiums all of the ongoing costs
for administration and for maintenance of premium stability and claim fluctuation reserve.
new text end

new text begin Subd. 3. new text end

new text begin Taxes and assessments. new text end

new text begin The premiums paid to the pool are not subject
to the taxes imposed by chapter 297I, and the pool is not subject to a Minnesota
Comprehensive Health Association assessment under section 62E.11.
new text end

Sec. 13.

new text begin [62U.12] MINNESOTA HEALTH BENEFITS PURCHASING POOL
RESERVES.
new text end

new text begin The association shall establish and maintain adequate reserves:
new text end

new text begin (1) for claims in process, incomplete and unreported claims, premiums received but
not yet earned, and all other accrued liabilities; and
new text end

new text begin (2) to ensure premium stability and the timely payment of claims in the event of
adverse claims experience.
new text end

Sec. 14.

new text begin [62U.13] STATUS OF AGENTS.
new text end

new text begin Notwithstanding sections 60K.49 and 72A.07, the pool may use, and pay referral
fees, commissions, or other compensation to, agents licensed as insurance producers
under chapter 60K.
new text end

Sec. 15. new text beginAPPOINTMENT OF INITIAL BOARD.
new text end

new text begin The health plan purchasing pool study group, as constituted on the day it expired
pursuant to Laws 2007, chapter 147, article 12, section 15, is revived the day following
final enactment of this section for the sole purpose of appointing the initial board of
directors of the Minnesota Health Benefits Purchasing Pool Association. Notwithstanding
Minnesota Statutes, section 62U.03, the health plan purchasing pool study group shall
appoint an initial board of directors consisting of 15 members. The study group shall
appoint five members who are employers in the state, five members who are individuals
residing in the state, and five members who are health care providers in the state. No
more than seven directors may be appointed from the seven-county metropolitan area.
Two-thirds of the membership of the study group must vote in favor of each appointment
made under this section. Initial appointments to the board must be made by August 1,
2008. The initial board shall serve until the pool begins operation, but in no event may
the term of this initial board exceed two years. Minnesota Statutes, section 62U.03,
subdivisions 4, 5, 6, 7, and 8, apply to the initial board from the date of its appointment.
The initial board of directors shall hire an administrator and prepare a plan of operation
that allows the pool to begin offering coverage as soon as practicable. The initial coverage
options and the premium rates must be established with the assistance of the administrator
and presented to the board for approval. The association may initially limit enrollment,
coverage options, and availability of coverage in certain geographic areas of the state
and to certain individuals or groups, and impose other restrictions that are necessary to
ensure that the pool is actuarially sound.
new text end

Sec. 16. new text beginAPPROPRIATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin General fund. new text end

new text begin $....... is appropriated from the general fund to the
Minnesota Health Benefits Purchasing Pool Association for the purposes of this act.
This appropriation is effective the day following final enactment and is available until
expended. It is intended that the association repay this appropriation when the association
determines that it has the financial resources to do so without jeopardizing the financial
stability of the pool.
new text end

new text begin Subd. 2. new text end

new text begin Health care access fund. new text end

new text begin A sum sufficient but not exceeding $....... is
appropriated from the health care access fund to the Minnesota Health Benefits Purchasing
Pool Association to establish adequate initial reserves to allow the association to begin
offering coverage in the pool on the limited basis as authorized under section 16. The
appropriation is available until expended. It is intended that the association repay the
health care access fund the amount appropriated under this section when the association
determines that it possesses the financial resources to do so without jeopardizing the
financial stability of the pool.
new text end